Black Gold, the story of oil in our lives

albert marrin
isbn: 978-0-375-86673-9

very readable

The Bootstrapper's Bible

How to start and build a business with a great idea and [almost] no money
by Seth godin
isbn: 1-57410-103-x

The aftershock investor

a crash course to staying afloat in a sinking economy
by David Wiedemer PhD
robert a. Wiedemer
cindy s. spitzer
isbn: 978-1-118-07354-4
www.aftershockpublishing.com

notes
"recovery" is still driven by government borrowing and printing. take away either one and we would be in a deep recession.

Investment outlook as of June 2012

• Stocks -likely volatile. In past have dropped after QE ended. worth looking into high dividend stocks of stable, conservative large-cap companies such as electric utilities, johnson & johnson, procter and gamble worth looking at in conservative portfolio. less potential for short-term growth, but also lower long term risk
• bonds - interest rates are as low as they can go, meaning potential for capital gains from bonds is pretty slim. recommend keeping shorter-duration high quality bonds, such as 2, 3, & 5 year treasuries. special bonds such as TIPS. ETFs such as TIP and MBB (for mortgage backed bonds)
• Europe - expect European Central bank to print more money
• international equities. probably not worth the risk of longer-term hold
• gold - likely to have explosive growth? see www.sprottphysicalgoldtrust.com/NetAsssetValue.aspx
• Silver and commodities, more volatile than gold in short-term and likely to go up in time. possible upward in commodities with inflation

real productivity growth is slowing down here and world wide

probably inflation and not deflation

Fed will continue QE for market stabilization, foreign currency markets stabilization and government spending deficit.

money managers investing in stocks are managing OPM and want to keep their jobs.

Valueing stocks
P/E, price to revenue ratio, book value/liquidation ratio, private company valuation,

high dividend stocks such as electric utilities work best in a market that is moving upward at a slow rate but with high volatility. (Monitor consumer price index at www.bls.gov)

Real estate; fixed rate mortgages, only make minimum payment, avoid HELOC

income producing rental properties. Rents eventually track re values, decreasing employment may decrease rent, squatters decrease rent

necessities sector; health care, education, food, basic clothing, transportation, government services, utilities

portfolio strategy; preservation of capital, minimal volatility, reasonable returns
portfolio components; gold, high dividend stocks, shorter term treasurys, TIPS, foreign currencies, commodities, short stock ETFs, short bond ETFs

government intervention will be most important factor affecting your portfolio

understand short selling, put options and LEAPS

What americans really want... really

the truth about our hopes, dreams and fears
by Dr. Frank I. Luntz
isbn: 978-1-4013-2281-6

excellent book

www.sba.gov/50plusentrepreneurs

Buy and Hedge, the 5 iron rules for investing over the long term

by Jay Pestrichelli & Wayne Ferbert
isbn: 978-0-13-282524-5
www.buyand hedge.com blog

notes:
capital lost is capital that cannot grow
risk is the input; return is the output
emotion is the enemy
volatility is kryptonite
return that matters is after tax return

hedge every investment
know your risk metrics
smart portfolio = long term outlook + diversification
unleash your innter guru
harvest gains and losses

3 strategies
indexing
asset class allocation
defensive hedging

gain from avoiding a loss is more than just the loss avoidance, it also benefits from compounded grown on capital preserved.

3 basic hedging tactics for your positions (sometime incorrectly called strategies)
married put (married call for short positions)
collar
in-the-money options (aka ITM calls or ITM puts

build a portfolio hedge

1. calculate your overall portfolio value and determine the net long or short value
2. find an investment that is an index product (such as an ETF) that has a high correlation to your portfolio and has options that trade on it. (Typically this is a broad market index for most investors, such as an S&P ETF)
3. buy the put protection (for net long portolios) or the call protection (for net short portfolios) that provides the downside protection the investor wants.

use delta to assess the extent you have hedged a position

4 key metrics

• capital at risk (CaR) maximum loss that could incur on an investment given the hedges put in place
• volatility- measure 1 year and 90 day
• implied leverage = (total market value of nonderivative securities + implied equity value for each derivatives position) / (total portfolio value - borrowed money)
• correlation - measures how 2 investments tend to move in price in relation to each other.

calculate portfolio volatility

1. gather closing portfolio liquidation value for every day the market was open in the trailing 12 months (about 252 data points)
2. calculate the percentage change in your portfolio each day. (adjust for any deposits or withdrawals each day)
3. of the resulting 252 percentage changes calculated, determine the standard deviation of the percentage changes
4. multiple  the standard deviation by the square root of 252 (15.87)

Steps for using correlation (6 month, 1 year and 3 year) to inform your risk decisions

• know correlation of each underlying investment in your portfolio to each other
• when adding a new investment to your portfolio, know the correlation of that investment to each investment already in your portfolio
• know the correlation of each position to the broader market. e.g. S&P 500 index
• http://www.sectorspdr.com/correlation/
• http://www.sectorspdr.com/sectortracker/
• http://www.sectorspdr.com/

 Rules for constructing a long-term portfolio

•  new investments should have expected hold time of more than 1 year
• portfolio should regularly have investment that have been held for 2 year or more. (often your broad market index investments)
• never invest with an intended hold time of less than 6 months

Base portfolio (when you hedge to reduce risk)

• Broad market indexes 70% (70-90%) recommend at least 50%, make sure that no more than 10% of your portfolio is ever concentrated in one sector
• Inner Guru investments 20% (range 0-10-40%)
• Cash 10%
• near retirement 10% to bond ETFs, then increase 10% each year until max out at 50%

ID your investing strengths - keep an investment journal
avoid being concentrated in one sector
review investments weekly

options

• are the preferred method of creating defensive hedges
• allow investors to define risk levels with a high degree of certainty (married put)
• are leveraged vehicles that allow hedges to be set without requiring a lare amount of capital
• can be sold for income to help fund the cost of hedges (a collar)
• are contract to take a buy/sell action at a predetermined price by a predetermined time on a defined asset.
• has 4 parts; underlying asset option is on, when option expires, strike price, whether it is a call or a put

Tax Free Wealth

How to build massive wealth by permanently lowering your taxes
by tom wheelwright, cpa
isbn: 978-1-937832-05-6

notes:
Tax laws were not initially intended to include the average working person... meant to reach only the excess earning of most wealthy individuals and corporations.... have evolved to become tools of social and economic policy making..... economic policy makers in government discovered that people respond quickly and directly to tax incentives.

Governments steer economic behavior through the tax code..reward desired behavior with tax breaks.

start small and think big. thing about the freedome that will come when you can devote most of your time to your business, investments and family.

spend money on things likely to grow your business.

taxfreewealthbook.com

invest for passibe income

document your income and expenses well. Scan receipts into your computer

cost segregation - breaking out the component parts of a building. see irs audit guide for their agents on how to handle cost segregations.

pay yourself reasonable rates for your position in your company. See www.salary.com

3 steps to successful estate planning; placing assets in trusts, creating a will & avoiding estate tax
Avoid probate because it includes courts, judges & lawyers; it's expensive and it's public

If you have charitable intentions with your estate consider a charitable trust. You can give assets to charity now but still take the income stream from the assets for the rest of your life.

Tax planning for permanent tax savings, retire rich, unlimited earnings, unrestricted withdrawals & unlimited control versus traditional deferred tax planning of temporary tax savings, retire poor, limited earnings, restricted withdrawals & limited control

Think through tax strategy: current investments, business entities, business & investment plans, how sure am i that my tax returns are being prepared in best way possible. How often do I hear from tax advisor (minimum 4x/yr), children age, children plan to work in your business, do i need to help my parents, how secure is my job. Need to have flexible strategy and look at big picture.

entities for asset protection; trusts, LLC best; general partnership not good; limited partnership, corporations good

government qualified retirement plans restrict what you can invest in, how you access your money. increase your tax rates, increase your risks, reduce overall returns due limitations in using leverage, lose control over what you can do with your money and when you can use it.

Do stock trading in self directed roth IRA

4 types of investment in oil & gas; stock, interest in royalties from producing well, invest in exploratory or development operations

use accounting software to prepare income and balance sheet

purchase audit defense plan for specific tax return

hiring the right tax advisor

1. what is your view of the tax law
2. who gets the most advantages of the tax law
3. what made you want to become a tax advisor
4. what would you like to know about me
5. tell me about your team of advisors
6. describe your personal business experience
7. tell me about your personal investment strategy
8. where did you eanr your masters of tax degree
9. give me 3 examples of how to reduce the risk of an irs audit
10. tell me your thoughts about asset protection

Your prospective tax advisor should discuss with you

1. tell me about your dreams and goals
2. describe your current and projected family situation
3. describe your relationship with your spouse and childrene
4. describe your current and projected investments
5. describe your current and projected business situation
6. explain your philosophy of tax reduction
7. what would you like to learn about the tax laws
8. how do you learn best? auditory, visual, tactile or kinesthetic
9. in a perfect world, how would you like to work with your CPA
10. who are the other members of your team?

the War of Art, Break through the blocks and win your inner creative battles

by Steven Pressfield
isbn: 0-446-69143-7

basically show up and do the work